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Cypriot banks reported impressive financial growth in the first nine months of 2024, with total profits reaching €952.5 million after taxes, a sharp rise from €602.92 million by mid-year. The sector's net interest income also soared, climbing to €1.53 billion by September, up from €1.03 billion in June.
According to the latest data from the Central Bank of Cyprus (CBC), the overall net operating income for the period increased significantly to €1.88 billion, compared to €1.22 billion just three months earlier.
“Cypriot banks are seeing solid performance this year, and it’s a clear reflection of their strengthened financial position,” said a CBC spokesperson. The total profits for the entire year of 2023 had reached €1.26 billion, underscoring the continued growth of the sector.
A closer look at the banks' financial stability reveals positive signs as well. Tier 1 capital, which measures banks’ core financial strength, rose slightly to €6.34 billion by the end of September, up from €6.31 billion in June. Meanwhile, the total risk-weighted assets (RWA) decreased to €22.83 billion from €22.91 billion in June, suggesting further improvements in risk management.
In addition to these solid profits, the banking sector also saw a notable decline in non-performing loans (NPLs), which are considered a key indicator of financial health. The NPL ratio decreased to 6.5% or €1.6 billion by the end of September, compared to 6.9% or €1.7 billion in June. This reduction signals a better quality of loans in the banking system.
The improvement is largely attributed to successful loan repayments, debt-to-asset swaps, and a number of loans being reclassified as performing after undergoing restructuring. Also contributing to the NPL reduction were write-offs, mainly involving loans already covered by provisions.
“Cypriot banks are making significant progress in reducing bad debt and improving the overall health of the financial sector,” the CBC said in its report. As of September, the coverage ratio of NPLs with provisions increased slightly to 55.7%, with €0.9 billion of provisions in place, up from 55% in June.
On the household side, NPLs decreased to €900 million by the end of September, representing 8.5% of total loans. This marks a slight improvement from the €916 million recorded in August. Total household loans stood at €10.57 billion, with provisions covering 41% of the household NPLs.
The corporate sector also saw a drop in NPLs, which decreased to €658 million, or 5.5% of total corporate loans. Small and medium-sized enterprises (SMEs) accounted for the majority of this figure, with €610 million in NPLs. Total corporate loans amounted to €11.96 billion by the end of September, with provisions covering 75.5% of the NPLs.
Cypriot banks are continuing to show resilience and sound recovery, as they address both profits and bad loans. With more positive trends expected, the sector remains on track for another strong year.
*With information from CNA
